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A, B, C and D are in partnership sharing profits and losses in the ratio of 36 : 24 : 20 : 20 respectively. E joins the partnership for 20% share and A, B, C and D in future would share profits among themselves as 3/10 : 4/10 : 2/10 : 1/10. Calculate new profit-sharing ratio after E’s admission .

Solution

 ABCD
OLD RATIO36242020

E is admitted for 20/100 share
Let combined share of profit of all partners after E’s admission = 1
Combined share of A, B, C and D after E’s admission = 1 − E’s Share
= 1-20/100 = 80/100

New Ratio = Combined of A, B, C and D × Agreed Share of A, B, C and D

A’s= 80/100 × 3/10
 = 24/100
B’s= 80/100 × 4/10
 = 32/100
C’s= 80/100 × 2/10
 = 16/100
D’s= 80/100 × 1/10
 = 8/100
 ABCDE
New profit-sharing ratio24/10032/10016/1008/10020/100
=68425

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